Sunday, October 18, 2009

Our Upside Down Medical Liability Crisis

I had an interesting visit with the husband of my niece last evening. He works as an ER doctor that is self-insured group of 60 physicians that cover the ER needs of four hospitals in Clark County near Las Vegas.

What is interesting is they are self-insured to save costs. As a group, then, they know how much per patient they must collect to assure liability care for every patient that comes to their emergency rooms.

That amount is $17 per patient per visit.

Guess how much their group receives for care they render to a Medicaid patient for a "level two" visit (minor problem: ear ache, sore throat, etc.)

Fourteen dollars per visit.

(Note: Medicare level two patients pay considerably better (about four times as much)).

When liability costs exceed the payments received for the care provided to those most in need, it's interesting that our legal and political forces in Washington see no need for liability reform as part of our larger health care reform efforts underway.



PookieMD said...

The fact the medicare and medicaid under pay absolutely needs to be addressed. It can't be part of the current heath care reform package, but we definitely need both tort reform and payment restructering. However, neither will be easy, and payment reform is likely to pit specialists against primary care physicians as the debate over how to split the payment pie intensifies. You and your ED physician relative could be on opposite sides of the fence.

rlbates said...

Good point, Dr Wes.

Anonymous said...

$14 with no zeros?
My ER bill was $14K! Plus a separate bill for the radiologist.

I cannot fathom people thinking $14 is acceptable payment for a physician's time. No wonder doctors are leaving medicine.

DrWes said...


Yes $14 with no zeros.

And that's assuming they can collect.

Keep that in mind when our Congressman debate physician cuts with the new Baucus health care reform bill.

shadowfax said...

First of all, $17 per patient is an insane premium. In our "malpractice crisis" state we are about half that, and that's after a 400% increase in premiums. I guess things must be a lot worse in NV than they are in the NW. Either that or their self-funded actuaries suck.

Second of all, do bear in mind that the level 2 E/M visit probably accounts for <1% of ER patients. It's a very very rarely used code. A prescription refill or a well-baby check might be level 2.

Third, when you calculate your per-patient premiums, you tend to group them by E/M level, as the risk is directly proportionate. You allocate, say, $2 per level 3 patient, $9 per level 4 patient and $15 per level 5 patient for a blended total rate of (for example) $10 per patient. So while it's a nice "Oh shit" example to say that the premium exceeds the reimbursement for a medicaid level 2, it's not really true.

Fourth, the greater point is totally totally true that in just about every state Medicaid premiums are an absolute disgrace.

Anonymous said...

shadowfax-are you self insured or are you comparing their cost to your premium?
i think a large part depends on how they anticipate using the $$$. are they in the accumulation phase, needing to build up a nest egg against liabilities or are they in a maintenance phase where they need to just keep adding incurred costs? are their investments keeping pace with their anticipated incomes, or have they increased the premium to make up for lost revenues? when you self-fund, as you know, there are a lot of variables to consider.

Keith said...


Just did this calculation:

level 2 visit visits in an 8 hour day would be a minimum of 32 (probaly more since a level 2 visit requires that you breath the air in the patients room at the same time). Soooo:

32 visits X 5 days/week X 48 weeks/year X 17 dollars means your friend is paying $130,560 per year for malpractice coverage. Sounds a bit high for an ER doc to me! You might suggest they buy malpractice insurance like the majority of us from an insurance company.

Secondly, you don't mention what their malpractice history is (not that I expect you would be asking this), but if there malpractice history is bad, then it would seem to me that they could be paying alot more for insurance than most and that this would account for their high premiums. In that case, the malpractice system is doing what we hope it would do (but often doesn't) which is to identify bad docs and make it financially unviable for them to practice. I suspect the problem is more in your example of using a level 2 visit which would be extremely rare for an ER doc. Most of their visits are likely to be of higher complexity and reimbursement, somewhat blunting your argument.

Also, I would ask how much they actually clear as profit that they take to the bank after receiving these measely reimbursements and paying this outrageous amount for malpractice. Is this not the bottom line?

Anonymous said...

"Per patient they must collect to assure liability care"? Can you explain that phrase?

Also, how much would capping damages, which is tort reform, reduce the number per patient? Is it cheaper for those who self insure in states like Missouri and California who have reform?

Michael Kirsch, M.D. said...

Amazingly, there are those who still doubt that defensive medicine is real. Even the Congressional Budget Office has belatedly admitted that tort reform would save billions. I think, however, that their estimates are too low. How do you define defensive medicine, let alone measure it? See